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Tuesday, March 13, 2012

Australian insurance companies not giving claimants a fair go has compared the performance of Australian insurance companies over the last two years to find that the same fundamental systemic failings occurred each year. The fundamental failings are exactly those plaguing insurance customers in Canterbury.

Whether EQC or private insurer, the problems here seem to be the same as in Australia, and equally persistent. In both countries too much reliance on industry self-regulation seems to allow some insurers a comfortable environment in which to behave badly with no risk of being required to improve their performance.

The following is an extract from the website (here).
When comparing the data from the latest Financial Ombudsman Service (FOS) General Insurance Code of Practice Overview with that of the previous year, a pattern emerges of systemic failings in some of the fundamental tenets of the code.
Of the four sections of the code that FOS reported as having the highest number of breaches in 2010/11, three of these sections were also among the most frequently breached in 2009/10.
The sections that appear to be causing insurers the most trouble in complying with are:
  • Section 3.4.1: The undertaking to “conduct claims-handling in a fair, transparent and timely manner”;
  • Section 3.6.1: The undertaking that “our employees and our service-providers will conduct their services in an honest, efficient, fair and transparent manner” when dealing with claims; and
  • Section 6.1.1: The undertaking to “conduct complaints-handling in a fair, transparent and timely manner”.
It’s difficult to ignore the common theme of these reports. They indicate that above all else, insurance companies are finding it difficult to resolve claims and complaints about those claims in a way that gives the claimant a fair go.
“Fair” and “transparent” aren’t words that can be easily misinterpreted, while the issue of timeliness in handling complaints has been a major debating point between the industry and the Federal Government over the past year. The discovery of a fallback point for insurers in the event of a major catastrophe was not well received.
FOS says in its report that the overwhelming cause of the breaches in 2010/11, at 49%, was a failure by staff to adhere to processes. In other words, many member companies are simply not following – or are not able to follow – the guidelines in place.
The recent updates to the code announced by the Insurance Council of Australia (ICA) should go some way to addressing these recurring black spots, which are hardly new and should have been upgraded years ago. Consumer demand is continually evolving; the code is not.

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